The ACIT, Circle-6, Surat V. The Agriculture Produce Market Committee, Surat

ITA 1661/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1684 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 11-05-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 20-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Reopening of assessment; Depreciation; Tangible material; Difference of opinion; Assessment record; Reason to believe; Change of opinion
• Section: 143(3); 142(1); 147; 148; 139

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA.NO.1661/AHD/2011 [ASSTT.YEAR 2003-04] ACIT, CIR.6 SURAT. VS THE AGRICULTURE PRODU C E MARKET COMMITTEE SARDAR MARKET, KUMBHARIA ROAD SAHARA DARWAJA, SURAT PAN : AAQALA 0057 F )* / (APPELLANT) +, )* / (RESPONDENT) REVENUE BY : SMT.SON I A KUMAR, SR.DR ASSESSEE BY : NONE / DATE OF HEARING : 11/05/2016 / DATE OF PRONOUNCEMENT: 12/05/2016 -./ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF THE LD.CIT(A)-IV, SURAT DATED 30.03.2011 PASSED FOR THE ASST.YEAR 2003-04. 2. ORIGINALLY REVENUE HAS RAISED FOUR GROUNDS OF AP PEAL, OUT OF THEM, GROUND NOS.3 AND 4 ARE GENERAL IN NATURE. IN GROUN D NO.1 AND 2, THE REVENUE HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,01,36,288/- WHICH WAS ADDED BY THE AO ON ACCOUNT OF ITA NO.1661/AHD/2011 2 UNDISCLOSED INTEREST INCOME. IN GROUND NO.2, THE R EVENUE HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS.18,93,973/- WHICH WAS MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION. THEREAFTER, THE REVENUE HAS FILED ADDITIONAL GROUND S OF APPEAL, WHEREBY IT HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN QUAS HING THE RE-ASSESSMENT ORDER BY HOLDING THAT REOPENING OF THE ASSESSMENT W AS NOT IN ACCORDANCE WITH LAW. 3. THE LD.COUNSEL FOR THE ASSESSEE HAS FILED AN APP LICATION FOR ADJOURNMENT ON THE GROUND THAT HE IS PRE-OCCUPIED I N SOME SOCIAL FUNCTION IN THE FAMILY. HOWEVER, AFTER GOING THROU GH THE RECORD, WITH THE ASSISTANCE OF THE LD.DR, WE DO NOT FIND ANY MER IT IN THE APPEAL, THEREFORE, WE DO NOT REQUIRE ASSISTANCE OF ANY REPR ESENTATIVE FROM THE ASSESSEE. WE REJECT THE PRAYER FOR ADJOURNMENT, AN D PROCEED TO DECIDE THE APPEAL EX PARTE QUA THE ASSESSEE. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 15.10.2004 DECLARING TOTAL INCOME AT RS.6 0,39,041/-. ON SCRUTINY, THE ASSESSMENT UNDER SECTION 143(3) OF T HE ACT WAS PASSED ON 24.3.2006. THE LD.AO HAD REOPENED THE ASSESSMENT A FTER RECORDING REASONS AND ISSUED NOTICE UNDER SECTION 148 OF THE ACT ON 22.9.2009. THE LD.AO HAS OBSERVED THAT THE ASSESSEE HAS NOT DI SCLOSED THE INTEREST INCOME RECEIVED ON FIXED DEPOSITS OF RS.14.70 CRORE S. IT HAS SHOWN THE INTEREST INCOME AT RS.16,23,718/-. ACCORDINGLY, HE MADE AN ADDITION OF RS.1,01,36,282/-. SIMILARLY, HE DISALLOWED A SUM O F RS.18,93,973/- OUT OF DEPRECIATION CLAIM. ON APPEAL, THELD.CIT(A) HA S HELD THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS FULLY AND ITA NO.1661/AHD/2011 3 TRULY FOR THE ASSESSMENT OF ITS INCOME. THE AO IS NOT JUSTIFIED IN REOPENING OF THE ASSESSEE. ACCORDING TO THE LD.CIT (A), THERE IS NO NEXUS WITH THE ALLEGED INFORMATION POSSESSED BY THE AO, V IS--VIS FORMATION OF BELIEF AT THE END OF THE AO TO DEMONSTRATE THAT THE INCOME HAS ESCAPED ASSESSMENT. THE FINDING RECORDED BY THE LD.CIT(A) READS AS UNDER: 3. I HAVE GONE THROUGH THE FACTS OF THE CASE, THE REASONS RECORDED BY THE A.O. FOR REOPENING, THE OBJECTIONS OF THE APPELLANT AGAINST REOPENING, A.O.'S OBSERVATIONS FOR OVER RUL ING THE OBJECTIONS AND THE EVIDENCES PROVIDED BY THE APPELL ANT IN SUPPORT OF ITS CLAIM THAT REOPENING WAS NOT VALID. FROM THE EVIDENCES PROVIDED BY THE APPELLANT, IT IS SEEN THAT THE INTE REST EARNED BY IT FROM FIXED DEPOSITS HAD BEEN SCRUTINIZED BY THE A.O . DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S. 143(3) WHEN T HE APPELLANT HAD PROVIDED FULL DETAILS OF INTEREST EARNED. THE A .O. HAD ALSO VERIFIED THE FIXED DEPOSIT REGISTER MAINTAINED BY T HE APPELLANT. THE DETAILS OF INTEREST EARNED (RS. 1,76,36,766/-) AND CORRESPONDING TDS OF RS. 16,23,718/- WAS PART OF THE ASSESSMENT R ECORDS. THE REASONS RECORDED FOR REOPENING BY THE A.O. STATE TH AT THE APPELLANT HAD SHOWN ONLY RS. 16,23,718/- AS INTEREST EARNED F ROM FIXED DEPOSITS WHEN HE SHOULD HAVE EARNED RS. 1,17,60,000 /- AND THEREFORE THERE WAS AN UNDER ASSESSMENT WAS NOT A V ALID REASON BECAUSE THE DETAILS OF CORRECT INTEREST EARNED WAS AVAILABLE WITH THE A.O. AS PART OF ASSESSMENT RECORDS WHICH SHOW T HAT APPELLANT HAD ACCOUNTED FOR INTEREST OF RS. 1,76,36,766/- WHI CH WAS HIGHER THAN THE AMOUNT ESTIMATED BY THE A.O. IN THE REASON S RECORDED. THE REASONS RECORDED FOR FORMATION OF BELIEF WERE C ONTRARY TO THE MATERIAL AVAILABLE ON RECORD WITH THE A.O. THE BELI EF WAS FORMED ON ERRONEOUS REASONS DESPITE THE CORRECT FACTS BEIN G AVAILABLE TO THE A.O. AT THE TIME OF RECORDING OF REASONS. THERE FORE THE FORMATION OF BELIEF CANNOT BE HELD AS BONA FIDE. HE NCE, THE REOPENING IS HELD AS INVALID. THE REASSESSMENT PROC EEDINGS ARE QUASHED. THIS GROUND IS ALLOWED. 5. THE REASONS RECORDED BY THE AO ARE PLACED ON PAG E NOS.30 TO 31 OF THE PAPER BOOK. THESE REASONS HAVE BEEN REPRODU CED BY THE ITA NO.1661/AHD/2011 4 LD.CIT(A) WHILE TAKING NOTE OF THE ASSESSEES ARGUM ENTS. THEY READ AS UNDER: 10. REASONS FOR THE BELIEF THAT INCOME HAS ESCAPE D ASSESSMENT. IN THIS CASE THE ASSESS IS LOCAL AUTHORITY ESTABLIS HED UNDER THE GUJARAT AGRICULTURE PRODUCT ACT, 1963. THE RETURN W AS FILED ON 15-10-2004 DECLARING TAXABLE INCOME AT RS. 60,39,04 1/-. DURING THE YEAR RELEVANT TO A. Y. 2003-04 THE ASSES SEE HAS SHOWN INTEREST RECEIVED ON FIXED DEPOSIT OF RS.16,23,718/ - AS VERIFIED FROM THE ACCOUNTS. IT WAS FURTHER NOTICED THAT THE ASSESSEE HAD FIXED DEPOSIT OF RS. 14.70 CRORE WITH SURAT DIST. C O. OP. BANK. THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCO UNTING. THE INTEREST RATE IS OF NATIONALIZED BANK FOR FIXED DEP OSIT, COMPARED WITH THE RATE OF INTEREST OF CO-OP. BANK WILL NOT B E LESS THAT 8% P.A. SO THE INTEREST RECEIVABLE WOULD BE RS.1,17,60 ,000/- . THE ASSESSEE HAS SHOWN INTEREST OF RS.16,23,718/- ONLY. HENCE, THERE IS A DIFFERENCE OF RS. 1,01,36,282/- WHICH HAS RESULTE D IN SHORT LEVY OF TAX OF RS.31,92,928/-. 6. BEFORE WE EMBARK UPON AN INQUIRY ON THE FACTS OF PR ESENT CASE, WE DEEM IT APPROPRIATE TO TAKE NOTE THE LUCID ENUNCIAT ION MADE BY THE ITAT IN THE CASE OF NEPTUNE TEXTILE MILLS PVT. LTD. VS. ACI T, PASSED IN THE ITA NO.2195/AHD/2009 ON THE SCOPE OF SECTION 147. THE ITAT HAS CONSIDERED A LARGE NUMBER OF DECISIONS IN THIS CASE, AND THEREAF TER, EXPLAINED THE POSITION. WE CANNOT DO BETTER THAN EXTRACTING THE DISCUSSION MADE BY THE TRIBUNAL IN THIS REGARD. IT READS AS UNDER: 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD CAREFULLY. WE FIND THAT ON THE STRENGTH OF AUTHORITATIVE PRONOUNCEMENT AT THE END OF THE HONBLE HIGH COURTS AS WELL AS OF THE HONBLE SUPREME COURT, THE ITAT IN THE CASE OF NEPTUNE TEXTILE MILLS PVT. LTD. VS. ACIT PASSED IN ITA NO.2 195/AHD/2009 MADE A LUCID ENUNCIATION OF THE SCOPE OF SECTION 14 7. WE CANNOT DO BETTER THAN EXTRACTING THE DISCUSSION MADE BY TH E TRIBUNAL IN THIS REGARD. IT READS AS UNDER: ITA NO.1661/AHD/2011 5 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE REOP ENING OF THE ASSESSMENT IS BAD IN LAW. FOR THE SAKE OF CONVENIEN CE WE REPRODUCE SECTION 147 AND PROVISO THERETO:- 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153 ASSESS OR RE-ASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SU BSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION , OR RECOMPUTED THE LOSS OR THE DEPRECIATION ALLOWANCE O R ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT Y EAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTION S 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR): PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE R ELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF TH E FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SEC TION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) O F SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL M ATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT Y EAR; [PROVIDED FURTHER THAT THE AO MAY ASSESS OR REASSES S SUCH INCOME OTHER THAN THE INCOME INVOLVING MATTERS WHICH ARE T HE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REVISION WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT]. THE REQUIREMENTS OF THE SECTION ARE AS UNDER :- (1) THE AO HAS REASON TO BELIEVE; (2) THAT AN INCOME CHARGEABLE TO TAX HAS ESCAPED AS SESSMENT; (3) IF FOUR YEARS HAVE EXPIRED FROM THE END OF THE RELEVANT ASST. YEAR THEN SUCH ESCAPEMENT WAS DUE TO FAILURE ON THE PART OF THE ASSESSEE- (I) TO FILE A RETURN U/S 139; (II) TO FILE A RETURN IN RESPONSE TO NOTICE U/S 142 (1) OR SECTION 148; (III) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACT S NECESSARY FOR THE ASSESSMENT. ALL THESE ASPECTS MUST COME IN THE REASONINGS RECOR DED BY THE AO. THE REASONS RECORDED BY THE AO SHOULD REFLECT ITA NO.1661/AHD/2011 6 (I) ASSESSEE IN RESPECT OF WHOM ASSESSMENT IS SOUGHT TO BE REOPENED; (II) ASSESSMENT YEAR AS SOUGHT TO BE REOPENED; (III) AMOUNT OF INCOME WHICH HAS ESCAPED ASSESSMENT; (IV) HOW THE ORIGINAL ASSESSMENT HAS BEEN DONE WHETHER U /S 143(1) OR U/S 143(3) OR SEC.147/148; (V) WHAT IS THE REASON OF ESCAPEMENT OF ASSESSMENT; (VI) WHETHER THERE IS ANY FAILURE AS MENTIONED IN THE PR OVISO IF ASSESSMENT IS SOUGHT TO BE REOPENED AFTER FOUR Y EARS FROM THE END OF THE RELEVANT ASST. YEAR; (VII) IN PARTICULAR, WHETHER THERE IS ANY THE FAILURE OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS FULLY AND TRULY NECESSARY FOR THE ASSESSMENT FOR THAT ASSESSMENT YE AR. (VIII) IF ASSESSMENT IS DONE U/S 143(1), THEN WHETHER THE PROVISION OF SECTION 149 ARE APPLICABLE. 8. IF REASONS RECORDED DID NOT REFLECT THESE INGRE DIENTS THEN REOPENING CANNOT BE SUSTAINED. ON THE ASPECT OF NEC ESSITY TO MENTION THE FAILURE OF THE ASSESSEE TO DISCLOSE TRU LY AND FULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT HON. ALLAHA BAD HIGH COURT IN CIT VS. PRADESHIYA INDUSTRIAL AND INVESTME NT CORPORATION OF UTTAR PRADESH LTD (2011) 332 ITR 324(ALL) HAS OB SERVED AS UNDER :- ADMITTEDLY, NOTICE UNDER SECTION 148 OF THE ACT WA S ISSUED AFTER THE EXPIRY OF FOUR YEARS. THE NOTICE UNDER THE PROV ISO OF SECTION 147 OF THE ACT CAN BE ISSUED AFTER THE EXPIRY OF FO UR YEARS ONLY IN CASE WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASS ESSMENT BY REASON OF THE FAILURE ON THE PAR! OF THE ASSESSES T O MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB- SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DIS CLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT FOR THAT ASSESSMENT YEAR. FROM THE PERUSAL OF THE REASON REC ORDED IT IS APPARENT THAT NO CASE HAS BEEN MADE OUT THAT THE AS SESSES HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FAC TS NECESSARY FOR HIS ASSESSMENT AND NO OBSERVATION HAS BEEN MADE IN THIS REGARD, ON THE BASIS OF THE SAME MATERIAL WHICH WAS AVAILABLE ON RECORD, THE ASSESSING AUTHORITY WAS OF THE VIEW THAT THE DEDUCT ION HAD BEEN WRONGLY ALLOWED UNDER SECTION 36(1)(VIII) OF THE AC T. THE TRIBUNAL OBSERVED THAT THE ASSESSEE HAD FURNISHED THE REQUIS ITE DETAILS IN RESPECT OF LEASING INCOME AND UPFRONT FEE AS RECEIV ED IN THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE SAME WA S DULY DISCLOSED IN THE AUDITED PROFIT AND LOSS ACCOUNT, A S IS EVIDENT FROM PAGES 4 AND 5 OF THE PAPER BOOK READ WITH PAGE 23 O F THE PAPER BOOK AND ALSO COMPUTATION OF INCOME FILED ALONG WIT H RETURN, A COPY OF WHICH IS PLACED AT PAGES 33 TO 35 OF THE PA PER BOOK. THIS ITA NO.1661/AHD/2011 7 FINDING OF THE TRIBUNAL HAS NOT BEEN DISPUTED BY RA ISING ANY QUESTION AND DURING THE COURSE OF THE ARGUMENT BY T HE LEARNED COUNSEL FOR THE APPELLANT. THEREFORE, WE ARE OF THE VIEW THAT ON THE FACTS AND CIRCUMSTANCES, NO SUBSTANTIAL QUESTIO N OF LAW ARISES FOR CONSIDERATION BY THIS COURT. LEARNED COUNSEL FOR THE APPELLANT CITED A DECISION OF THE BOMBAY HIGH COURT IN THE EASE OF DR. AMIN'S PATHOLOGY LABO RATORY V. P. M. PROSAD, JOINT CIT [2001] 252 ITR 673 ; [2002] 172 C TR 696. WE HAVE GONE THROUGH THE DECISION OF THE BOMBAY HIGH C OURT. WE ARE OF THE VIEW THAT THE SAID DECISION IS NOT APPLI CABLE TO THE FACTS OF THE PRESENT CASE. IN THE SAID CASE, THE BOMBAY H IGH COURT HAS HELD THAT THE ASSESSING AUTHORITY HAS OVERLOOKED TH E DISPUTED ITEM WHICH HE HAS NOTICED SUBSEQUENTLY AND AT THE T IME OF PASSING THE ORIGINAL ORDER OF ASSESSMENT, HE COULD NOT BE SAID TO HAVE OPINED ON THE ABOVE ITEM. THEREFORE, THERE WAS NO CHANGE OF OPINION. WHILE IN THE PRESENT CASE, COMPLETE DET AILS WERE FURNISHED ALONG WITH THE RETURN AND DURING THE COUR SE OF THE ASSESSMENT PROCEEDINGS AND AFTER AN APPLICATION OF MIND, THE DEDUCTION UNDER SECTION 36(1)(VIII) OF THE ACT WAS ALLOWED. IN THE REASON RECORDED NO CASE HAS BEEN MADE OUT THAT THER E WAS FAILURE TO DISCLOSE ANY MATERIAL PARTICULAR ON THE PART OF THE ASSESSEE. THEREFORE, LIMITATION BEYOND THE PERIOD OF FOUR YEA RS WAS NOT AVAILABLE TO THE ASSESSING AUTHORITY. ADMITTEDLY, T HE NOTICE WAS ISSUED AFTER FOUR YEARS, THEREFORE, THE PROCEEDING WAS BARRED BY TIME AND THE TRIBUNAL HAS RIGHTLY HELD SO. FOR THE REASONS STATED ABOVE, THE APPEAL FAILS AND IS DISMISSED. HON. BOMBAY HIGH COURT, IN THE CASE OF BHAVESH DEVE LOPERS VS. A.O. & OTHERS (2010) 329 ITR 249 (BOM), NOTED THAT THE RECORDED REASONS DID NOT SHOW FINDING THAT THERE WAS A FAILU RE TO DISCLOSE NECESSARY FACTS. IN THAT CASE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB(10) FOR RS.3.85 CRORES WHICH WAS ALLOWED BY TH E AO VIDE ORDER U/S 143(3) AND ASSESSMENT WAS SOUGHT TO BE RE OPENED AFTER EXPIRY OF FOUR YEARS ON THE GROUND THAT THE C LAIM OF DEDUCTION U/S 80IB(10) INCLUDED INELIGIBLE ITEMS OF OTHER INCOME SUCH AS SOCIETY DEPOSITS, STREET PARKING CHARGES, S UNDRY BALANCES, ETC. HON. BOMBAY HIGH COURT IN THE CASE OF BHAVESH DEVELOPERS VS. A.O. & OTHERS (SUPRA) OBSERVED AS UNDER :- HELD, ALLOWING THE PETITION, THAT EX FACIE, THE RE ASONS WHICH HAD BEEN DISCLOSED TO THE ASSESSEE WOULD SHOW THAT THE INFERENCE THAT THE INCOME HAD ESCAPED ASSESSMENT WAS BASED ON THE DISCLOSURE MADE BY THE ASSESSEE ITSELF. THE REASONS SHOWED THA T THE FINDING WAS BASED ON THE DETAILS FILED BY THE ASSESSEE AND FROM THE PROFITS AND LOSS ACCOUNT. THEREFORE, IT WAS IMPOSSI BLE FOR THE ITA NO.1661/AHD/2011 8 ASSESSING OFFICER TO EVEN DRAW THE INFERENCE THAT T HERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT FOR ASS ESSMENT YEAR 2002-03. SIGNIFICANTLY, THE REASONS THAT HAD BEEN D ISCLOSED TO THE ASSESSEE DID NOT CONTAIN A FINDING TO THE EFFECT TH AT THERE WAS A FAILURE TO FULLY AND TRULY DISCLOSE ALL NECESSARY F ACTS, NECESSARY FOR THE PURPOSE OF ASSESSMENT. IN THESE CIRCUMSTANCES, THE CONDITION PRECEDENT TO A VALID EXERCISE OF THE POWER TO REOPE N THE ASSESSMENT, AFTER A LAPSE OF FOUR YEARS FROM THE RE LEVANT ASSESSMENT YEAR, WAS ABSENT IN THE PRESENT CASE. TH E NOTICE WAS NOT VALID AND WAS LIABLE TO BE QUASHED. HON. SUPREME COURT IN THE CASE OF ITO VS. LAKHMANI MEWAL DAS (1976) 103 ITR 437 (SC) HELD THAT WHERE ASSESSMENT IS SOUGHT TO BE REOPENED AFTER EXPIRY OF FOUR YEARS REASONS FOR BELIEF MUST SHOW LIVE LINK BETWEEN THE MATERIAL AND BELIEF. THE RE SHOULD BE A RATIONAL CONNECTION OR RELEVANT BEARING ON THE FORM ATION OF THE BELIEF. RATIONAL CONNECTION POSTULATES THAT THERE M UST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMING TO T HE NOTICE OF THE ITO AND THE FORMATION OF THE BELIEF THAT THERE IS A N ESCAPEMENT OF INCOME OF THE ASSESSEE FOR THAT PARTICULAR YEAR BEC AUSE OF HIS FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FA CTS. EVEN THOUGH COURT CANNOT GO INTO SUFFICIENCY OR ADEQUACY OF THE MATERIAL AND SUBSTITUTE ITS OWN OPINION FOR THAT OF THE ITO ON T HE POINT AS TO WHETHER ACTION SHOULD BE INITIATED FOR REOPENING OF THE ASSESSMENT, BUT AT THE SAME TIME WE HAVE TO BEAR IN MIND THAT IT IS NOT ANY AND EVERY MATERIAL, HOWSOEVER VAGUE AND INDEFINITE OR DISTANT, REMOTE AND FAR FETCHED, WHICH WOULD WARRAN T THE FORMATION OF THE BELIEF RELATING TO ESCAPEMENT OF T HE INCOME OF THE ASSESSEE FROM ASSESSMENT. HON. SUPREME COURT IN THE CASE OF CIT VS. KELVINATO R INDIA LTD. (2010) 320 ITR 561(SC), WHILE DISMISSING THE LEGISL ATION OF SECTION 147, HELD THAT EXPRESSION REASONS TO BELIE VE NEEDS TO BE GIVEN SCHEMATIC INTERPRETATION IN ORDER TO ENSURE A GAINST AN ARBITRARY EXERCISE OF POWER BY THE AO. THE POWER TO REOPEN THE ASSESSMENT IS NOT AKIN TO POWER TO REVIEW THE ASSES SMENT AND MERE CHANGE OF OPINION WOULD NOT JUSTIFY THE COURSE OF ACTION U/S 147. UNLESS THE AO HAS TANGIBLE MATERIAL FACT TO RE OPEN THE ASSESSMENT, POWER U/S 147 CANNOT BE VALIDLY EXERCIS ED. 9. IN THE PRESENT CASE THERE IS A CLEAR CASE OF CHA NGE OF OPINION. EVEN THOUGH RELIANCE HAS BEEN PLACED ON THE DECISIO N OF HON. SUPREME COURT IN BALLIMAL NAVALKISHORE AND OTHERS V S. CIT (SUPRA), THAT JUDGMENT EXISTED AT THE TIME WHEN THE AO TOOK THE DECISION U/S 143(3) AND HELD THE EXPENDITURE AS CUR RENT REPAIRS ALLOWABLE IN THE PROFIT AND LOSS ACCOUNT UNDER SECT ION 143(3). ITA NO.1661/AHD/2011 9 WITHOUT THERE BEING MATERIAL ON RECORD AND AN ALLEG ATION OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ANY MATERIA L WHICH COULD HAVE MADE THE AO TO BELIEVE THAT EXPENDITURE SO INC URRED WAS CAPITAL IN NATURE, NEW VIEW SO TAKEN FOR REOPENING OF ASSESSMENT WOULD BE ONLY A CHANGE OF OPINION. EARLIER SAME EXP ENDITURE WAS HELD AS REVENUE IN NATURE AND NOW CONSIDERED AS CAP ITAL WOULD BE AKIN TO REVIEWING HIS OWN DECISION ON THE SUBJECT. HON. BOMBAY HIGH COURT IN THE CASE OF ICICI PRUDENCIAL LIFE INS URANCE CO. LTD. VS. ACIT (2010) 325 ITR 471 (BOM) ALSO HELD THAT WH EN THERE IS NO MATERIAL ON RECORD AND WITHOUT THERE BEING ANY A LLEGATION OF FAILURE OF THE ASSESSEE TO DISCLOSE SUCH MATERIAL F ACT, ASSESSMENT CANNOT BE REOPENED AFTER FOUR YEARS. HON. GUJARAT H IGH COURT IN INDUCTO ISPAT ALLOYS LTD. VS. ACIT (2010) 320 ITR 4 58 (GUJ) AND NIKHIL K. KOTAK VS. MAHESH KUMAR (2009) 319 ITR 445 (GUJ) ALSO HELD THAT WHERE THE PERIOD OF FOUR YEARS HAS EXPIRE D FROM THE END OF RELEVANT ASST. YEAR THE PROVISO TO SECTION 147 W OULD COME INTO PLAY. IT STIPULATES THREE CONDITIONS AND ONE OF THO SE CONDITIONS IS SHOWING OMISSION OR FAILURE ON THE PART OF THE ASSE SSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR TH E ASSESSMENT. WHEN WE GO THROUGH THE REASONS RECORDED AND AS MENT IONED ABOVE WE DO NOT FIND ANY REFERENCE TO SUCH FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ANY MATERIAL FACT NECESSAR Y FOR ASSESSMENT AND IN FACT NARRATION GIVEN IN THE REASO NS DO NOT SHOW ANY SUCH FAILURE WHICH COULD BE INFERRED EVEN IF NO T SO MENTIONED SPECIFICALLY IN THE REASONS. IN OUR CONSIDERED VIEW WHEN NEITHER THERE IS ANY ALLEGATION OF FAILURE NOR THE AO HAS B ROUGHT ANY MATERIAL ON RECORD TO SUGGEST ESCAPEMENT OF INCOME THEN IT IS ONLY A CHANGE OF OPINION AND THEREFORE ASSESSMENT C ANNOT BE REOPENED AFTER EXPIRY OF FOUR YEARS. 7. IN THE LIGHT OF THE ABOVE, LET US EXAMINE THE FA CTS OF THE PRESENT CASE. IN THE ORIGINAL ROUND OF ASSESSMENT PROCEEDINGS, THE L D.AO HAS ISSUED NOTICE UNDER SECTION 142(1) ON 14.2.2006 AND 24.2.2006. C OPIES OF THESE NOTICES ARE AVAILABLE AT PAGE NOS.49 AND 54 OF THE PAPER BOOK. THE ASSESSEE HAS GIVEN REPLY TO THESE QUESTIONNAIRES. THE QUESTION NO.2 I N THE NOTICE DATED 14.2.2006 READS AS UNDER: 2. YOU ARE REQUESTED TO PRODUCE THE FOLLOWING BOOK S OF ACCOUNTS: (1) SALARY REGISTER (2) FIXED DEPOSIT REGISTER (3) RENT REGISTER ITA NO.1661/AHD/2011 10 (4) P.F. REGISTER 8. SIMILARLY IS THE POSITION WITH REGARD TO THE NEX T NOTICE. THE ASSESSEE HAS FILED COPY OF FIXED DEPOSIT REGISTER, WHICH IS AVAILABLE AT PAGE NOS.61 TO 65 OF THE PAPER BOOKS. IN THE FIXED DEPOSIT REGISTER, THE ASSESSEE HAS SHOWN TOTAL INTEREST INCOME OF RS.1,76,36,766/-. APART FROM T HE ABOVE, THE ASSESSEE HAS FILED COPY OF INCOME AND EXPENDITURE ACCOUNT IN THE YEAR ENDING ON 31.3.2003. THE ASSESSEE HAS SHOWN THE INTEREST INC OME AT RS.1,76,36,766/-. THE CASE OF THE ASSESSEE WAS THAT IT HAS SHOWN INTE REST INCOME AND THE ALLEGED AMOUNT OF RS.16,23,718/- IS CONCERNED, IT IS TDS CO MPONENT. THE AO FAILED TO TAKE NOTE OF THE TRUE INTEREST INCOME SHOWN BY T HE ASSESSEE, EVEN IN THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT. WHEN WE CONFRONTED THESE DETAILS TO THE LD.DR, DURING THE COURSE OF HEARING, SHE WAS UNABLE TO CONTROVERT THE FINDING OF THE LD.CIT(A). SHE HAS J UST RELIED UPON THE ORDER OF THE AO. AS OBSERVED BY THE ITAT IN THE CASE OF NEP TUNE TEXTILE MILLS PVT. LTD. (SUPRA), INTERDICTION PROVIDED IN PROVISO APPE NDED TO SECTION 147 OF THE INCOME TAX PUTS AN EMBARGO UPON THE POWERS OF THE A O TO REOPEN AN ASSESSMENT IN THE CASES, WHERE 143(3) ASSESSMENT WA S MADE IN THE ORIGINAL ROUND AND FOUR YEARS HAVE EXPIRED, THEN THE AO COUL D NOT REOPEN THE ASSESSMENT, UNLESS INCOME CHARGEABLE TO TAX HAS ESC APED THE ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO D ISCLOSE ALL MATERIAL FACTS PERTAINING TO ITS INCOME FULLY AND TRULY FOR THE AS SESSMENT YEAR. IN THE REASONS, IT IS NOWHERE DISCERNIBLE AS TO WHICH PART THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY WHICH BECAME CAUSE OF ESCA PEMENT OF INCOME FROM TAXATION IN THIS YEAR. APART FROM THIS FACT, THE A SSESSEE HAS DISCLOSED ALL DETAILS, AND IT HAS ACCOUNTED THE INTEREST INCOME. THE AO HAS APPLIED HIS MIND IN THE SCRUTINY ASSESSMENT MADE U/S.143(3) IN THE FIRST ROUND. IN THIS SITUATION, REOPENING OF THE ASSESSMENT CANNOT BE JU STIFIED. THE LD.CIT(A) HAS RIGHTLY QUASHED THE ASSESSMENT ORDER. WE DO NOT FI ND ANY ERROR IN THIS ORDER ITA NO.1661/AHD/2011 11 OF THE LD.CIT(A). ACCORDINGLY, THE APPEAL OF THE R EVENUE IS DEVOID OF ANY MERIT. IT IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 12 TH MAY, 2016 AT AHMEDABAD. SD/- SD/- ( N.K. BILLAIYA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER